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Resources - Glossary of Terms

Word

Definition

Accounts payable

The amount owed by the organization to outside sources for items and services.

Accounts receivable

Unpaid money owed to the
organization from outside sources for services rendered. Annual report: A
voluntary report issued by a foundation or corporation that provides financial
data and descriptions of its grantmaking activities. Annual reports vary in
format from simple typewritten documents listing the year's grants to detailed
publications that provide substantial information about the grantmaker's
grantmaking programs.

Annual fund

The Annual Fund is
an organized effort to obtain gifts on a yearly basis to support, at least in
part, general operations of a nonprofit organization.

Applicant

Party requesting a grant.

Application

Written form outlining the requirements of the grant.

Assets

The amount of capital or
principal - money, stocks, bonds, real estate, or other resources - controlled
by a foundation or corporate giving program. Generally, assets are invested and
the resulting income is used to make grants.

Articles of Incorporation

A legal document
that creates a specific type of organization, a corporation, under the laws of a
particular state.

Audited statements

An evaluation by an independent
auditing firm of a nonprofit organization's financial position.

Award

Funds provided as a result of winning a grant

Beneficiary

In philanthropic terms, the donee
or grantee receiving funds from a foundation or corporate giving program is the
beneficiary, although society benefits as well.

Bylaws

A legal document
outlining the self-imposed rules that will regulate an organization's own
actions.

Capital Campaign

A capital campaign
is a time-limited effort by a nonprofit organization to raise significant
dollars for a specific project.

A grant that is paid only if the
donee organization is able to raise additional funds from other sources.
Challenge grants are often used to stimulate giving from other donors. See also
matching grant.

Common grant application

Grant application format that has
been adopted by groups of grantmakers to allow grant applicants to produce a
single proposal for a specific community of grantmakers.

Community foundation

A 501(c)(3) organization that
makes grants for charitable purposes in a specific community or region. The
funds available to a community foundation are usually derived from many donors
and held in an endowment that is independently administered; income earned by
the endowment is then used to make grants. Although a community foundation may
be classified by the IRS as a private foundation, most are classified as public
charities and are thus eligible for maximum tax-deductible contributions from
the general public. See also 501(c)(3); public charity.

Community fund

An organized community program
which makes annual appeals to the general public for funds that are usually not
retained in an endowment but are instead used for the ongoing operational
support of local agencies. See also federated giving program.

Company-sponsored foundation (also referred to as a corporate foundation)

A private foundation whose assets
are derived primarily from the contributions of a for-profit business. While a
company-sponsored foundation may maintain close ties with its parent company, it
is an independent organization with its own endowment and as such is subject to
the same rules and regulations as other private foundations. See also private
foundation.

Corporate foundation

See company-sponsored foundation.

Cooperative venture

A joint effort between or among
two or more grantmakers. Cooperative venture partners may share in funding
responsibilities or contribute information and technical resources.

Corporate giving
program

A grantmaking program established
and administered within a for-profit corporation. Because corporate giving
programs do not have separate endowments, their annual grant totals generally
are directly related to company profits. Corporate giving programs are not
subject to the same reporting requirements as corporate foundations.

Deferred Charitable Gift Annuity

A Deferred
charitable gift annuity is a way for a donor to receive income at a future date.

Deferred revenue

Money that the organization has
received, but has not yet earned as of the closing date on the balance sheet.
This amount is carried as a liability until the organization provides the goods
or services for which the money was received.

Distribution committee

The committee responsible for
making grant decisions. For community foundations, the distribution committee is
intended to be broadly representative of the community served by the foundation.

Donee

The recipient of a grant. (Also
known as the grantee or the beneficiary.)

Donor or Grantmaker

An individual or organization
that makes a grant or contribution to a donee. (Also known as the grantor.)

Employee matching grant

A contribution to a
charitable organization by an employee that is matched by a similar contribution
from his or her employer. Many corporations have employee matching-gift programs
in higher education that encourage their employees to give to the college or
university of their choice.

Employer Identification Number (EIN)

A nine-digit number
assigned by the Internal Revenue Service. All IRS-designated 501(c)(3) nonprofit
organizations have an EIN.

Endowment

Funds intended to be
invested in perpetuity to provide income for continued support of a
not-for-profit organization.

Expenditure responsibility

In general, when a
private foundation makes a grant to an organization that is not classified by
the IRS as a "public charity," the foundation is required by law to provide some
assurance that the funds will be used for the intended charitable purposes.
Special reports on such grants must be filed with the IRS. Most grantee
organizations are public charities and many foundations do not make "expenditure
responsibility" grants.

Family foundation

An independent
private foundation whose funds are derived from members of a single family.
Family members often serve as officers or board members of family foundations
and have a significant role in their grantmaking decisions. See also operating
foundation; private foundation; public charity.

Federated giving program

A joint fundraising
effort usually administered by a nonprofit "umbrella" organization that in turn
distributes the contributed funds to several nonprofit agencies. United Way and
community chests or funds, the United Jewish Appeal and other religious appeals,
the United Negro College Fund, and joint arts councils are examples of federated
giving programs. See also community fund.

501(c)(3)

The section of the
tax code that defines nonprofit, charitable (as broadly defined), tax-exempt
organizations; 501(c)(3) organizations are further defined as public charities,
private operating foundations, and private non-operating foundations. See also
operating foundation; private foundation; public charity.

Fiscal Agent or Fiscal Sponsor

Generally, fiscal agent's or fiscal sponsor's are
organizations that take responsibility for the fiscal duties of an unrelated party.
Fiscal sponsorship is a formal arrangement in which one non-profit sponsors another non-profit or project of
the non-profit that may lack tax-exempt status. This alternative allows a non-profit
to seek grants and solicit tax-deductible donations under their fiscal agent's or fiscal
sponsor's tax-exempt status.

Fixed assets

Estimated value of
land, buildings, equipment and other tangible items owned by the organization.

Fiscal year

A 12-month period
for which an organization plans the use of its funds. This period may be a
calendar year but can be any 12-month period. A fiscal year accounting period
should normally coincide with the natural operating cycle of the organization.
If an organization files an IRS Form 990, it is required to define its
accounting period on Line A at the top of the form.

Form 990

The public record
information return that many United States public foundations are required by law to submit
annually to the Internal Revenue Service.

Form 990-PF

The public record
information return that all United States private foundations are required by law to submit
annually to the Internal Revenue Service.

Form T3010

The information return that all Canadian registered charities are required by law to submit annually to the Canadian Revenue Agency. The information a charity provides on the public portion of its annual return is available to the public. Other information a charity provides on or with the return is confidential and for the CRA use only.

General/operating support

A grant made to
further the general purpose or work of an organization, rather than for a
specific purpose or project; also called an unrestricted grant.

General purpose foundation

An independent
private foundation that awards grants in many different fields of interest. See
also special purpose foundation.

Grant

Award of financial assistance

Grantee

The recipient of a
grant. (Also known as the donee or the beneficiary.)

Grantee financial report

A report detailing
how grant funds were used by an organization. Many corporate grantmakers require
this kind of report from grantees. A financial report generally includes a
listing of all expenditures from grant funds as well as an overall
organizational financial report covering revenue and expenses, assets and
liabilities.

Grantor

An individual or
organization that makes a grant or contribution to a grantee. (Also known as the
donee.)

Grants payable

Unpaid amount of
grants or awards that an organization plans to pay other organizations or
individuals.

Applicant

See donee.

Grantmaker

See donor.

Grantee

Recipient of the grant award

Grantor

Party issuing the grant

Grassroots fundraising

Efforts to raise
money from individuals or groups from the local community on a broad basis.
Usually an organization's own constituents Ᾱ people who live in the neighborhood
served or clients of the agency's services Ᾱ are the sources of these funds.
Grassroots fundraising activities include membership drives, raffles, auctions,
benefits, and a range of other activities.

Guidelines

Procedures set forth
by a funder that applicants should follow when approaching a grantmaker.

Income

Money that the
organization has received from contributions, grants, the performance of
services, etc (line 12 on Form 990). These are net figures from which rental
expenses, costs, sales expenses, direct expenses, and costs of good sold (lines
6b, 8b, 9b, and 10b on Form 990) have been deducted.

Incorporated

To become a
registered nonprofit with the IRS, you must first become a corporation.

Independent foundation

A grantmaking
organization usually classified by the IRS as a private foundation. Independent
foundations may also be known as family foundations, general purpose
foundations, special purpose foundations, or private non-operating foundations.
The Foundation Center places independent foundations and company-sponsored
foundations in separate categories; however, federal law normally classifies
both as private, non-operating foundations subject to the same rules and
requirements. See also private foundation.

In-kind contribution

A contribution of
equipment, supplies, or other tangible resource, as distinguished from a
monetary grant. Some organizations may also donate the use of space or staff
time as an in-kind contribution.

Matching grant

A grant that is made
to match funds provided by another donor. See also challenge grant; employee
matching gift.

Matching funds

Contributions required by a party other than the grantor.

Nonprofit

Nonprofit
Organization.

Operating foundation

A 501(c)(3)
organization classified by the IRS as a private foundation whose primary purpose
is to conduct research, social welfare, or other programs determined by its
governing body or establishment charter. An operating foundation may make
grants, but the sum generally is small relative to the funds used for the
foundation's own programs. See also 501(c)(3).

Operating support grant

A grant to cover the
regular personnel, administrative, and miscellaneous expenses of an existing
program or project. See also general/operating support.

Payout requirement

The minimum amount
that private foundations are required to expend for charitable purposes
(including grants and, within certain limits, the administrative cost of making
grants). In general, a private foundation must meet or exceed an annual payout
requirement of five percent of the average market value of its total assets.

Planned Giving

Planned Giving is a
complex program of various financial instruments that can be adapted to each
donor's needs.

Pledges and grants receivable

Funds promised to an
organization from grantmakers, individual donors, etc., but not yet received.

Private foundation

A nongovernmental,
nonprofit organization with funds (usually from a single source, such as an
individual, family, or corporation) and program managed by its own trustees or
directors. Private foundations are established to maintain or aid social,
educational, religious, or other charitable activities serving the common
welfare, primarily through the making of grants. See also 501(c)(3); public
charity.

Program amount

Funds that are
expended to support a particular program administered internally by a foundation
or corporate giving program.

Program officer

A staff member of a
foundation who reviews grant proposals and processes applications for the board
of trustees. Only a small percentage of foundations have program officers.

Program Related investment (PRI)

A loan or other
investment (as distinguished from a grant) made by a foundation to another
organization for a project related to the foundation's philanthropic purposes
and interests.

Program services

Fees and other
monies received by an organization for services rendered. These services must
relate directly to the primary purpose for which the organization received its
tax-exempt status.

Proposal

A written
application, often accompanied by supporting documents, submitted to a
foundation or corporate giving program in requesting a grant. Most foundations
and corporations do not use printed application forms but instead require
written proposals; others prefer preliminary letters of inquiry prior to a
formal proposal. Consult published guidelines.

Public charity

A nonprofit
organization that qualifies for tax-exempt status under section 501(c)(3) of the
IRS code. Public charities are the recipients of most foundation and corporate
grants. Some public charities also make grants. See also 501(c)(3); private
foundation.

Qualifying distributions

Expenditures of a
private foundation made to satisfy its annual payout requirement. These can
include grants, reasonable administrative expenses, set-asides, loans and
program-related investments, and amounts paid to acquire assets used directly in
carrying out tax-exempt purposes.

Query letter

A brief letter
outlining an organization's activities and its request for funding that is sent
to a potential grantmaker in order to determine whether it would be appropriate
to submit a full grant proposal. Many grantmakers prefer to be contacted in this
way before receiving a full proposal.

Restricted vs. Unrestricted funds

Donors can choose to
designate how a nonprofit can use their gifts.

RFA

Request for application

REP

An acronym for
Request for Proposal. When an organization issues a new contract or grant
program, it sends out RFPs to agencies that might be qualified to participate.
The RFP lists project specifications and application procedures. While a few
foundations occasionally use RFPs in specific fields, most prefer to consider
proposals that are initiated by applicants.

Ruling year

The year that the
IRS granted an organization 501(c)(3) status.

Seed money

A grant or
contribution used to start a new project or organization. Seed grants may cover
salaries and other operating expenses of a new project.

Set-asides

Funds set aside by a
foundation for a specific purpose or project that are counted as qualifying
distributions toward the foundation's annual payout requirement. Amounts for the
project must be paid within five years of the first set-aside.

Special purpose foundation

A private foundation
that focuses its grantmaking activites in one or a few areas of interest. See
also general purpose foundation.

Sponsorship

Affiliation with an
existing nonprofit organization for the purpose of receiving grants.
Applicants may either apply for federal tax-exempt status or affiliate with a
nonprofit sponsor.

Tax-exempt

Refers to
organizations that do not have to pay taxes such as federal or state corporate
tax or state sales tax. Individuals who make donations to such organizations may
be able to deduct these contributions from their income tax.

Tax-exempt bond liabilities

The amount of
tax-exempt bonds (or other obligations) issued by an organization on behalf of a
state or local governmental unit, or by a state or local governmental unit on
behalf of an organization, and for which an organization has a direct or
indirect liability. Tax-exempt bonds include state or local bonds and any
obligations, including direct borrowing from a lender, or certificates of
participation.

Technical assistance

Operational or
management assistance given to nonprofit organizations. It can include
fundraising assistance, budgeting and financial planning, program planning,
legal advice, marketing, and other aids to management. Assistance may be offered
directly by the staff of a foundation or corporation, or it may be provided in
the form of a grant to pay for the services of an outside consultant. See also
in-kind contributions.

Trustee

A foundation board
member or officer who helps make decisions about how grant monies are spent.
Depending on whether the foundation has paid staff, trustees may take a more or
less active role in running its affairs.

Workplace giving

Many large employers
provide a way for employees to donate to select charities.

Unified Registration Statement

Most states have
cooperated to produce a uniform reporting mechanism for nonprofits.